Should Apple be forced to open up iPod and iTunes?August 6, 2004 3:21 PMSubscribe

Real and France's Virgin claim that they deserve to be able to sell their music on Apple's iPod. To prove they're serious, Virgin Mega has filed a complaint against Apple to do so. Perhaps I'm missing something here, but last I checked it wasn't anybody's responsibility to open up their product or service to purposely allow the competition in. That is, of course, unless the government steps in. Are Real and Virgin Mega just being whiny little brats, angered that they're not invited to the party? What are legitimate reasons for the legal system to get involved and to rule in favor of such plaintiffs? While the obvious Microsoft may come to mind, are there other examples you can think of? As for me, I'd like to hand out copies of "Atlas Shrugged" and "The Fountainhead" to both Real and Virgin Mega...posted by tgrundke (41 comments total)

I apologize in advance, I should have said, "they deserve to be able to have their music formats play on Apple's iPod", not "sell their music on Apple's iPod." Long day folks....the brain's only working at 50% right now....posted by tgrundke at 3:28 PM on August 6, 2004

But they can sell their music for Apple's iPod. They just have to let us download it in mp3 format...posted by reklaw at 3:29 PM on August 6, 2004

I know apple can be control freaks about their stuff, but why not open up their platform? Apple makes all their money selling ipods, this would just solidify it as *the* platform of choice, ensuring more sales.

I say it is in Apple's best interests to bring on Real, wma, and ogg files asap.

But I agree that to sue a company over it to force your company's stuff onto it is taking it way too far.posted by mathowie at 3:32 PM on August 6, 2004

mmmm.... mega virgins.....

oh, uh, sorry.....

Anyway, I think Apple should license Fair Play, especially since they claim that they make most of their profit off of selling iPods, not off of selling the songs. Wouldn't more people selling iPod-compatible songs make even more people want iPods? But hey, if they don't wanna, I guess they don't hafta.posted by spilon at 3:33 PM on August 6, 2004

Perhaps I'm missing something here, but last I checked it wasn't anybody's responsibility to open up their product or service to purposely allow the competition in.

And that was Metallica's point all along ...posted by magullo at 3:36 PM on August 6, 2004

The idea that the records I buy in WalMart won't play on the record player I bought at Sears is NOT something that is good for me as a consumer. So, I pretty much hate all of these people for using any of their stupid-ass DRM crippleware.

That's why I won't buy music from Apple, and I won't buy music from Real, and I won't buy music Virgin. On principal though, I have to say that Apple is way more wrong about this than the other two though as Apple is doing more to work against a potential buyer (somebody who has an iPod and prefers Real) than the others who are at least trying to satisfy their customers by giving them the ability to play music on competing hardware.

Which isn't to say I'm not on my 3rd iPod. As long as it will play an open unrestricted format, I'll used the hardware. I won't buy the music though.

To the main question though, since the government created the problem with crap like the DMCA, it's up to the govermnet to resolve it, so I have no problem with the court getting involved here.posted by willnot at 3:37 PM on August 6, 2004

It's because Jobs (correctly) believes that the strength of the design of the iPod isn't just the player, it's in the desktop as well-iTunes, the Music Store, etc.
Opening it up to Real means when Real screws up somehow (and they will, I mean, they *are* Real) it reflects badly on the iPod. Think of it as blaming the browser when the website is crap.
You and I will know where things went wrong, but the mass consumer--let's call her granma--will see it as a problem with the iPod.
Apple doesn't need the help yet, so why risk the user experience? It's stupid, yes, but no one's been forcing people to buy iPods. And I've been buying from Bleep and Audiolunchbox pretty much non-stop.posted by teradome at 3:51 PM on August 6, 2004

All these companies complain that Apple is being anti-competitive. The fact is, if these companys want to sell music that will play on the iPod, they are more than welcome to use either of the 2 open formats on the iPod. Any non-encrypted AAC file, or any MP3 file, will play perfectly on the iPod.

If Real or Virgin want to sell music, that should take their problems up with the RIAA who is forcing these companies to sell crippled products to consumers who want less restrictions.posted by benjh at 4:02 PM on August 6, 2004

I don't see why Apple has to or should open their mp3 player to let Real or Virgin in.

I'm on my 2nd iPod now and love it all the more and I've never bought a song through iTunes. I get my music the old fashioned way, I buy a CD (usually after having sampled it online or downloaded a track or two), rip it and put it on my iPod. I bought it, I should be able to use it any damned way I want.

And now I've gotta go and get me some Rick James so I can get funky tonight!posted by fenriq at 4:08 PM on August 6, 2004

> That's why I won't buy music from Apple, and I won't buy music from Real,
> and I won't buy music Virgin.

I'm going to spend the rest of my life ripping my vinyl classical.posted by jfuller at 4:08 PM on August 6, 2004

(somebody who has an iPod and prefers Real)

I defy you to show me such an awful creature. They don't exist (and except through extremes of genetic manipulation, I hope they never will ...)posted by Wulfgar! at 4:18 PM on August 6, 2004

Virgin is perfectly free to create their own music player and online music store and computer-based music organizing and playing software and compete head-to-head with Apple. In fact, they were free to do it before Apple did, but didn't. Everybody says Apple's music efforts are doomed as soon as there's more decent competition for iTunes, the iTMS, and the iPod -- so, what the hell is Virgin waiting for? They're letting some computer company dictate how they, a major record label and music store, sell music? WTF?

Heh. Apple won this one fair and square; this is just sour grapes.posted by kindall at 4:48 PM on August 6, 2004

amberglow: The record companies wouldn't agree to selling mp3, which is a DRM-incompatible format. There's this, but it's looks to be too complicated to implement for consumer use. Plus, AAC is the next-generation format. Everybody is or will soon be hopping on the bandwagon.posted by bitpart at 5:39 PM on August 6, 2004

I think Teradome's correct: it isn't about the iPod, it's about the iTunes Music Store.

iTMS has (or claims) a 70 percent market share of digital downloads right now. Opening up the iPod also means opening that market for Real. All opening could do is hurt Apple's iTMS share and sales. And I imagine that Jobs & co see today's sales figures as the tip of the iceberg. CDs are going away. That's pretty obvious to everyone.

There's a boatload of money to be made delivering digital content--more than in selling mp3 players over the long haul. Which is the same reason they don't just use mp3, and the same reason that Virgin and Real want in.

It's certainly not in Apple's best interest to bring in any more formats, other than the proprietary ones. People like the iTunes Music Store, for now at least. There's nothing else like it. They should act to preserve their market share, which means preserving the status quo. Why would you let another retailer share your showroom. And that's what the iPod is--in some respects--a beautiful showroom for the iTunes Music Store.

Having said that, I hate the damn FairPlay DRM that makes it a pain in the ass for me to listen to the songs I buy from iTMS on all of the various machines I use.posted by emptyage at 5:53 PM on August 6, 2004

amberglow: The record companies wouldn't agree to selling mp3, which is a DRM-incompatible format.
ahh--that's what i thought. Idiots.posted by amberglow at 5:55 PM on August 6, 2004

Is anyone else struck by the irony of demanding interoperability for DRM?

It is significant that this is developing in the European courts because they've been more skeptical of the value of vertical monopolies than American courts. I'm also struck by the irony that this is exactly the same business strategy that makes for much of the demonization of Microsoft.posted by KirkJobSluder at 5:56 PM on August 6, 2004

There's no reason you couldn't DRM MP3s. After all, Apple's protected files are basically just AES applied over MPEG 4 files, with a bit of extra metadata.

I find it humorous that everybody wants in on the online music selling business, which is, for Apple, barely profitable. Real and Virgin want to not make money selling music, just like Apple does! Go figure.posted by kindall at 6:02 PM on August 6, 2004

I'd like to be able to play Real content in VNC or mplayer on my linux box too, but I'm not going to sue Real to make it happen.

From what I can tell the Fairplay format is valuable, being able to access it will get you inroads to the most popular mp3 player on the market. I don't think Apple makes real money from Apple Music Store but they also don't lose money either. Apple's concern is most likely that their music business becomes unprofitable. They also are probably worried that whatever abortion Real comes up with will harm peoples perception of the iPod.

If I were Steve Jobs I'd make an offer to Real and Virgin to allow them to open a Real/Virgin store within a store on the iTunes store site for a fee. This way Apple still controls the look and feel, the consumers get access to more content and Real and Virgin get access to the iPod.

If I were Real/Virgin I'd realize that the Real format is valueless and just negotiate my own deal to get our tunes encoded on Fairplay/AAC on the iTunes store.posted by substrate at 6:54 PM on August 6, 2004

I don't see why Apple has to or should open their mp3 player to let Real or Virgin in.

The irony is that those two don't realize Apple has already opened up the player and let them in. It isn't as though MP3 is some kind of closed format.... all they have to do is adopt it. They're not asking for access; they're asking for help screwing their customers.

They can all go blow themselves as far as I'm concerned: I buy music from allofmp3 and never worry about any of that DRM crap.posted by Mars Saxman at 6:58 PM on August 6, 2004

I don't think it's that clear-cut that Real and Virgin don't have a case. What constitutes monopoly abuse? a) the monopolist engages in profiteering (absurd profit margins), or b) uses the monopoly in one category to expand into another category where they would otherwise be handicapped. There are two distinct markets here: those for music players and those for online sales of "licensed" (DRM'ed) music.

So, (a) is probably not happening (yet), but what about (b)? there is a positive feedback loop here and it's not all virtuous: the captive audience of the iPod buyers (the dominant music player) is forced to buy any "licensed" music from ITMS (the dominant online music store). ITMS in turn is able to negotiate better licensing fees from music labels (or independents) because of the captive audience that comes built-in to the iPods. The better selection and decent prices, in turn help Apple sell more iPods. The profit margin on the iPods then finances ITMS (as Jobs has admitted). Lather, rinse, repeat.

Yes, Apple has earned their dominance in both categories, but that doesn't make the situation any less monopolistic or any less prone to (future) abuse. The situation isn't very different from the dual Windows/Office monopolies.posted by costas at 7:04 PM on August 6, 2004

See the thing is, in a couple of years Apple wants to have gotten *everyone* hooked on iTunes, but it won't just be music. They'll be selling e-books, movies, software, everything, and through a DRM system that exists potentially everywhere. They don't want everyone horning in on their DRM action because they want to be *the* DRM provider.

Screw the iPod. In three years my phone will be able to store more songs than my iPod. And if it runs some version of FairPlay, then all the better. For Apple.

They claim that they're using the iTunes music store to increase the market penetration of the iPod, but really it's the other way around.posted by bshort at 7:05 PM on August 6, 2004

I could have sworn I read an article recently where Real claimed to crack Apple's DRM and that they were going to start selling tracks beginning last monday. What happened with their big announcement?posted by dobbs at 7:12 PM on August 6, 2004

costas - actually, what you're arguing is that Apple has a monopoly on FairPlay-protected AAC files, which is true, but only because that technology is theirs. They certainly don't have a monopoly on either mp3 players or on digital music.

Also, in response to an earlier comment, does anyone use anything put out by Real because they want to? Real is more hostile to its customers than any corporation I can think of what with their insistence on putting out crappy software that does nothing but pester and spy on you. Defanging an installation of Real Player is like defusing a bomb. Forget to click off of even one little checkbox and you'll regret it forever, and even then it insists on trying to install new software constantly. They can go fuck themselves, as far as I'm concerned.posted by bshort at 7:12 PM on August 6, 2004

bshort: Half the problem here is that the company raising a flag is Real --which I hate with a passion too... But:

I keep thinking back to 1994 or so, when Word/Excel started dominating the Windows office app market (because they were better than the competition on Windows) and shortly thereafter Windows was just as entrenched a monopoly as Office itself. Microsoft never had a monopoly on all office apps either --just Windows office apps, and they invented the technology too (Windows). But the Windows/Office feedback loop killed all competition eventually. The parallels to ITMS/iPod are eery (and not lost on Jobs, I am sure).posted by costas at 7:26 PM on August 6, 2004

The reason Apple won't open up is because it is looking (for once!) at the long term prospects of the system. The money in 3-5 years will not be in selling iPods, because eventually that market will be saturated and the profit margins will fall on the hardware. It's the good ole' game of razor blades and print cartridges for $79 HP printers.

3-5 years from now Apple will have reduced their cost for creating, storing and delivering digital content down to the point where it will become a significant source of profit, not just revenue. This will provide them with the cushion needed to branch out into other digitial media DRM based content such as video, once codecs and bandwith make it feasible.

Oh, Apple is not being foolish at the moment - they're holding their cards tightly because they can. At any moment Apple could patch the firmware to accept WMA files, OGG Vorbis or the like.

For those who think Apple is repeating the same mistake it made 20 years ago with Macintosh, I disagree. Steve Jobs is narcissistic and egotistical, but far from stupid and has demonstrated his desire to see iPod succeed where Macintosh failed. I don't think they'll repeat the same mistake twice.posted by tgrundke at 7:47 PM on August 6, 2004

Costas, I don't really want to argue about this, but I think you're mistaking what's being monopolized for the entire market.

The thing is, no one has to sell their content full of DRM encumberances. They do it because they're afraid that selling it in digital format will mean that they'll only ever sell one copy. What they don't realize is that most people are more than willing to pay for content, as long as they don't have to fuck around with extreme restrictions and if they can get it for a reasonable price. ITMS works because the price is ok and the restrictions, while sometimes annoying, tend to be pretty transparent. Also, it's fairly easy to convert the files into an unencumbered format.

I'm digressing, though. The iPod is Apple's platform. If they want to make it so that it will only play their own format of DRM files, that's their business. It's not like they have a monopoly on the concept of digital music or something.

If Real wants Apple to open up their interfaces they should negotiate with them to come up with a mutually agreeable solution. Suing them into submission is *never ever* going to work. The best case is that Apple gives them a half-assed solution; the worst case is that Real pours a bunch of money down the drain, alienates even more customers (if that's even possible), and becomes even more marginalized in the market.

Maybe it's only the hypocrisy of Real that get's my dander up, but it's worth keeping it in mind. Real tries to prevent anyone from developing a player that's interoperable with RM files, but they want Apple to do EXACTLY THE SAME THING for them? On Apple's dime? They need to put down the crack pipe and get a little bit of perspective.posted by bshort at 9:39 PM on August 6, 2004

Virgin is perfectly free to create their own music player and online music store and computer-based music organizing and playing software and compete head-to-head with Apple. In fact, they were free to do it before Apple did, but didn't. Everybody says Apple's music efforts are doomed as soon as there's more decent competition for iTunes, the iTMS, and the iPod -- so, what the hell is Virgin waiting for? They're letting some computer company dictate how they, a major record label and music store, sell music? WTF?

Heh. Apple won this one fair and square; this is just sour grapes.

As long as you don't complain about microsoft's OS dominance on PC's......posted by The God Complex at 11:51 PM on August 6, 2004

This seems very much like Sony and their minidisc. I don't see any legal reason Apple should have to do anything to open up their propietary format.posted by pekar wood at 5:09 AM on August 7, 2004

If *you* have made the first usable hard drive based mp3 player and writtern the first quality integration of a player and a desktop system, and made the first profitable net-based music distribution system when everyone had failed at all these tasks previously would you feel like lifting a finger for the failures?

Real is a joke. They had one innovation and it was marvelous. Playing radio streams over a modem line in 1995 was freaking amazing. And then, nothing. Nada. In the years that followed all they've made is poison. Users HATE their software. Apple is a software company known for making programs that people love -- why would they want any association? Besides which Real's CEO has insulted the Steve. It's over.posted by n9 at 7:09 AM on August 7, 2004

As long as you don't complain about microsoft's OS dominance on PC's

To the extent that they came by that fair and square, I don't. How much this is is debatable, of course. In any case, complaining about Windows at this point seems to me a lot like complaining about the weather. Sure, you can gripe, but it's not like you can have any effect on a force of nature.posted by kindall at 7:50 AM on August 7, 2004

Sure, you can gripe, but it's not like you can have any effect on a force of nature.

Yes, but due to monopoly laws they have been forced to comply with certain things recently, both at home and abroad. My point is simply that Apple is in many ways similar to Microsoft, although they get off a lot easier because they haven't quite reached "that stage" yet (also because they've always been the "good guy" to Microsoft's bad guy). If Apple continues to dominate the handheld market, it would be interesting legally to see what they have to do to make it a fair market.posted by The God Complex at 9:51 AM on August 7, 2004

But it's *already* a fair market. No one sells as many mp3 players as Apple simply because no one has come up with such a small device that is as stylish and easy to use. Apple isn't keeping anyone else from building whatever the hell they want to build.

It's not illegal to be a monopoly. It's illegal to use your monopoly powers to extend or deepen your monopoly.

Look at all of this another way. You *could* say that Apple has a monopoly on computers that run OSX, and that would be sort of right, but only because no one else has the rights to OSX. All you'd be doing is describing the ownership of intellectual property. Microsoft, on the other hand, has a monopoly in several overlapping software sectors: desktop business applications and operating systems are the two main areas. And it's an illegal monopoly because they use that leverage to drive out other competitors and to move into new areas.posted by bshort at 11:11 AM on August 7, 2004

Fundamentally what is at stake is your ability to use the products you buy in the way you choose.

Why should Apple be able to define your usage of a device you legally purchased?

Companies are doing their damndest to force you to use the products you buy in the way they intend. I urge you not to go along with this.

These lock in usage rights aren't explicitly legal. They are appropriated second hand. It was made illegal or questionably legal to circumvent "protections". A company defines a use pattern for its product and then "protects" it from being used any other way.

I implore you all to stand up for your rights to use items you purchase in any way you see fit.posted by rudyfink at 2:35 PM on August 7, 2004

Apple doesn't define your usage of the device. You can play all the mp3 files you want, either purchased online or ripped from your own CDs or downloaded from P2P networks. All Apple does is offer another option.

Say HP came out with a new printer. Say they made it to use cartridges that were based on a printer cartridge standard (wouldn't that be nice?), so that any company could make the cartridges. Say they also developed new technology that allowed printing in more vibrant color or something, and included that in their own cartridges, as a competitive edge. Now, should they have to license that new technology to their competitors too?posted by Nothing at 4:57 PM on August 7, 2004

Picture it, 1981: 3M Corporation of Minnesota has won their lawsuit which demanded that Sony corporation modify their Video Cassette Recorders, known as VCRs, to accept 3M's video cassette format which is currently incompatible with Sony's "Betamax" systems. 3M, which could manufacture tapes which would work in the VCRs Sony manufactures, stands by its proprietary 3Max tape format and states that it would not be within the business's best interest to create a Betamax-compatible cassette. The price of Sony's VCRs, steadily falling from their original 4 figure prices to an average $799 is expected to spike back up to $999 or more in order to cover the cost related to the court-ordered modification.

Sony's spokesperson commented: "Of course we're saddened by this decision. We developed the technology, we put it on the market and people responded. 3M could have chosen to develop their own VCR technology, instead they created proprietary video cassettes, and now we're bearing the burden of their choice. In the end, it is the customer who will pay."

Meanwhile, Magnavox Corporation of America has announced plans to release their own brand of VCR in the coming months which is compatible with neither the Betamax or 3Max format of video cassette tapes. Magnavox VCRs will only be able to use MagnaMax video cassettes, another proprietary format which at the moment remains patented and cannot be manufactured by competitors. Magnavox says that their initial pricepoint for their VCRs will be $1,199.posted by Dreama at 11:05 PM on August 7, 2004

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